Vidyo Lands a Telemedicine Deal That Everyone Wanted

About two months ago, in a piece about the rapid growth of the videoconference start-up Vidyo, I ended by saying that other players in the market — namely Cisco Systems and Polycom — should be a tad worried. Today I was proven prescient. Vidyo, the New Jersey-based video conference start-up, has just landed a deal to expand one of the world’s largest telemedicine networks into patients’ homes.

You’ve probably heard a lot about telemedicine over the years. The idea is that since doctors can’t be everywhere they’re needed, particularly when it comes to large yet sparsely populated areas, a good videoconference with a doctor is almost as good as an in-person visit — especially when it’s a routine visit, and the patient or doctor would otherwise have to travel. Obviously, it’s not always the optimal choice. But when you’re not feeling well and need to see a specialist, how much better would you feel if you have to drive 200 miles and back to get to an appointment?

The Canadian province of Ontario is a pretty big place, reaching from the Great Lakes to Hudson Bay. Most of the population is concentrated in the Canadian capital of Ottawa, and in what’s called the “Golden Horseshoe,” reaching from Toronto west to Waterloo (notably the home of Research In Motion) and northeast to Peterborough. But there are a lot of people spread out in smaller communities.

The Ontario Telemedicine Network has 3,000 health care professionals working at 1,175 sites around the province, and its Web site says it will deliver 135,000 patient visits this year. That works out to more than 500 visits per business day. The existing network is built primarily on gear from Cisco Systems and Polycom, and runs on a private network.

The plan is to expand the service so that patients can see a doctor from the comfort of their own homes. And that’s where Vidyo comes in.

One thing that helped Vidyo land this deal, CEO Ofer Shapiro told me, was that it was relatively easy to deploy alongside the OTN’s existing system. Vidyo has a rich set of APIs that allow programmers to marry it up with workflow and scheduling systems already in place. “It’s not just a simple matter of taking a call and connecting the patient with the doctor. It has to be scheduled, it has to be logged, there’s a lot of compliance issues that have to be considered, and it also has to be 100 percent private,” Shapiro told me.

The other thing in Vidyo’s favor is a technology called Adaptive Video Layering. And while it sounds like a bit of gibberish, it’s actually pretty useful. Since not everyone has the same kind of high-quality video network — either in the home or the office, or anywhere else, for that matter — the video stream can be adapted to the network conditions it encounters.

Howard Lichtman, an analyst and consultant specializing in videoconferencing technologies with the Human Productivity Lab, tells me that Vidyo essentially breaks a video stream into three segments, and then, depending on the network conditions, it will select the segment that’s best suited to the network in use. The end result is that even on slower networks there’s not the same loss of quality that’s experienced on other products.

Lichtman tells me this deal was a big one, which all the significant video players had bid on. “It’s one of the biggest, if not the biggest network like it in the world,” he told me. “Everyone was showing up to bid.”

Until recently, Vidyo was focused primarily on the desktop video business, but it has aimed its sights at higher-end office conferencing systems. Backed by $74 million from Menlo Ventures, Rho Ventures, Sevin Rosen Funds, Star Ventures and the Four Rivers Group, it has been going after the higher-end videoconferencing market, hoping to undercut Cisco and Polycom with less expensive solutions.

Just last week, Ricoh, the Japanese office equipment company, said it is using Vidyo’s technology as the basis for its office teleconferencing system. But it’s also showing up in other, more consumer-oriented places: Vidyo is one of the technologies behind Google Hangout on the social network Google+. Suddenly Vidyo is showing up wherever there’s video. Did I say the other guys might be starting to worry? It’s because of stuff like this.

Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work

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